"There is no consensus among economists or policymakers about a simple policy rule that is best suited to cover a wide range of scenarios," Yellen said.

Some congressional Republicans have pressed for the Fed to adopt rules and justify to Congress in a policy "audit" any cases where rate decisions deviate from that rule.

The proposals, including the one under consideration this week, are not expected to become law, but have nonetheless prompted a host of Fed policymakers to air their concerns in public.

FORM, Yellen wrote, includes an audit provision that is "based on a false premise." The law could curb the Fed's ability to act in a crisis, she added.

This would "likely lead to an increase in inflation fears and market interest rates, a diminished status of the dollar in global financial markets, and reduced economic and financial stability," Yellen said.